At a conventional bank, deposits are treated as loans for which the bank agrees to pay a fixed mark up regardless of any loss or return incurred by the conventional bank.
In an Islamic Bank, all funds received are identified according to their types (savings, current, foreign accounts etc). The funds are tracked in their utilisation to ensure proper profit and loss sharing . Profits from shariah compliant activities are then allocated to the specific account categories based on pre-assigned weightages.
